1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,799 Speaker 1: at Bloomberg dot com. So it is trade all the time. 8 00:00:21,840 --> 00:00:25,080 Speaker 1: It has to do with China. The details that we 9 00:00:25,200 --> 00:00:27,479 Speaker 1: know at this point the both sides seem to have 10 00:00:27,560 --> 00:00:30,160 Speaker 1: agreed upon is a There does appear to be some 11 00:00:30,240 --> 00:00:33,560 Speaker 1: text that has been agreed upon and be the December 12 00:00:33,640 --> 00:00:37,600 Speaker 1: fifteen tariffs will not go into affect Chinese negotiators saying 13 00:00:37,640 --> 00:00:39,960 Speaker 1: that US has agreed to roll back some of the 14 00:00:39,960 --> 00:00:44,159 Speaker 1: existing tariffs. President Trump tweeting out uh that perhaps some 15 00:00:44,320 --> 00:00:47,639 Speaker 1: of the levies will be reduced, but sort of unclear 16 00:00:47,800 --> 00:00:49,879 Speaker 1: as to what that is. Joining us here in our 17 00:00:49,920 --> 00:00:53,240 Speaker 1: interactive broker studios, Leland Miller, chief executive officer of China 18 00:00:53,280 --> 00:00:56,680 Speaker 1: beige Book International, and we've been framing a lot of 19 00:00:56,680 --> 00:01:00,880 Speaker 1: the trade negotiations in the light of who does does 20 00:01:00,960 --> 00:01:04,440 Speaker 1: the trade war hurt more the US or China. Can 21 00:01:04,480 --> 00:01:06,319 Speaker 1: you give us a sense of whether that is a 22 00:01:06,440 --> 00:01:10,360 Speaker 1: legitimate frame to view the negotiations through that. Basically, China's 23 00:01:10,400 --> 00:01:12,479 Speaker 1: hurting so much that they need to come to the table. 24 00:01:13,160 --> 00:01:16,280 Speaker 1: It's a it's a good framework, but it's only one 25 00:01:16,280 --> 00:01:17,960 Speaker 1: of the many frameworks. I mean, you also have to 26 00:01:18,000 --> 00:01:20,960 Speaker 1: look at what President Trump feels as pressure as you approach. 27 00:01:22,040 --> 00:01:25,000 Speaker 1: That's why we're doing a deal right now. So there's 28 00:01:25,040 --> 00:01:27,440 Speaker 1: there's various pressures on the on the on the two sides, 29 00:01:27,520 --> 00:01:30,200 Speaker 1: and you know, China is hurt more by tariffs and 30 00:01:30,200 --> 00:01:33,240 Speaker 1: in the US does have more leverage, but President Trump 31 00:01:33,280 --> 00:01:37,600 Speaker 1: has more time sensitive pressure right now. So there's, uh, 32 00:01:37,760 --> 00:01:39,639 Speaker 1: there's a lot going on, and I think both sides 33 00:01:39,880 --> 00:01:42,520 Speaker 1: have been pushing towards a deal. And this is where 34 00:01:42,520 --> 00:01:45,960 Speaker 1: we start. When you talk about China saying that they 35 00:01:45,959 --> 00:01:49,320 Speaker 1: are going to roll back some of their tariffs in 36 00:01:49,440 --> 00:01:52,360 Speaker 1: tandem with the US doing the same, how big of 37 00:01:52,360 --> 00:01:53,920 Speaker 1: a victory is that? I mean, can you give us 38 00:01:53,920 --> 00:01:56,400 Speaker 1: a sense of what kind of tariffs China does put 39 00:01:56,560 --> 00:02:00,320 Speaker 1: on US imports and imports from other nations. Well, the 40 00:02:00,320 --> 00:02:02,720 Speaker 1: problem at the very beginning for the Chinese is that 41 00:02:02,760 --> 00:02:05,560 Speaker 1: they didn't have a reciprocal amount even close to be 42 00:02:05,560 --> 00:02:08,520 Speaker 1: able to put tariff for tariff on US goods, so 43 00:02:08,919 --> 00:02:13,880 Speaker 1: they applied UH tariffs. But these were never particularly damaging. 44 00:02:14,000 --> 00:02:16,320 Speaker 1: The companies they hurt the most were ones that we're 45 00:02:16,360 --> 00:02:18,560 Speaker 1: sort of facing it form both directions. They were paying 46 00:02:18,639 --> 00:02:20,760 Speaker 1: China tariffs and they were paying US tariffs. They're sort 47 00:02:20,760 --> 00:02:23,400 Speaker 1: of caught in the middle. So this is the pullback 48 00:02:23,560 --> 00:02:27,840 Speaker 1: on the Chinese side is important in that it's another 49 00:02:28,000 --> 00:02:30,799 Speaker 1: element of the escalation, but it's it's not the headline here. 50 00:02:30,840 --> 00:02:33,480 Speaker 1: The headline is certainly what the Chinese are getting on 51 00:02:33,600 --> 00:02:36,200 Speaker 1: teriff roll back and what the or reduction and what 52 00:02:36,280 --> 00:02:39,600 Speaker 1: the US is getting in terms of reforms outside of purchases, 53 00:02:40,160 --> 00:02:42,680 Speaker 1: which is which is the real big question right now? Well, 54 00:02:42,720 --> 00:02:46,000 Speaker 1: and have we gotten any kind of detail on that whatsoever? No, 55 00:02:46,240 --> 00:02:48,040 Speaker 1: And I think that's one of the reasons that this 56 00:02:48,080 --> 00:02:50,880 Speaker 1: thing has been in flux all day long. What was 57 00:02:51,040 --> 00:02:55,120 Speaker 1: being announced yesterday, Uh, it was interesting. Almost every news 58 00:02:55,160 --> 00:02:57,680 Speaker 1: source had a different twist on what we're supposedly coming out, 59 00:02:57,800 --> 00:03:01,239 Speaker 1: and but everybody had this gigantic, some level of gigantic 60 00:03:01,280 --> 00:03:04,120 Speaker 1: deal with huge rollbacks and and this is very interesting 61 00:03:04,120 --> 00:03:07,799 Speaker 1: from our perspective because very recently, even I mean this 62 00:03:07,840 --> 00:03:10,280 Speaker 1: past week, there was still a lot of internal discussion 63 00:03:10,320 --> 00:03:13,800 Speaker 1: amongst the you know, the administration's team on whether the 64 00:03:13,880 --> 00:03:17,440 Speaker 1: best method to move forward was rate reductions or rollbacks, 65 00:03:17,480 --> 00:03:20,000 Speaker 1: and so there there didn't see to be an agreement. 66 00:03:20,080 --> 00:03:22,280 Speaker 1: Yet what we're seeing come into play right now is 67 00:03:22,320 --> 00:03:25,160 Speaker 1: it looks like neither one out. They're both part of 68 00:03:25,160 --> 00:03:27,600 Speaker 1: the solution, and you're gonna see a tariff rate reduction 69 00:03:27,600 --> 00:03:30,760 Speaker 1: at first, and then you're going to probably see I 70 00:03:30,800 --> 00:03:33,000 Speaker 1: think this is what's what's next. You're gonna be seeing 71 00:03:33,160 --> 00:03:36,040 Speaker 1: at some of these other tariffs rolled back as the 72 00:03:36,160 --> 00:03:39,480 Speaker 1: Chinese deliver on their purchase agreement. So this is sort 73 00:03:39,480 --> 00:03:42,080 Speaker 1: of a combo deal that's that's being put in there 74 00:03:42,120 --> 00:03:44,120 Speaker 1: so that the US maintains a little bit more leverage. 75 00:03:44,240 --> 00:03:46,560 Speaker 1: Do we have a sense of whether the Phase two 76 00:03:46,600 --> 00:03:50,560 Speaker 1: negotiations are baked into this Phase one deal? In other words, 77 00:03:50,560 --> 00:03:52,880 Speaker 1: of time frame, what the issues are going to be 78 00:03:53,200 --> 00:03:56,000 Speaker 1: something to get uh, you know a little bit more 79 00:03:56,120 --> 00:03:59,160 Speaker 1: into the public domain. So so what I've been saying 80 00:03:59,200 --> 00:04:01,160 Speaker 1: for several months now is that there there's not going 81 00:04:01,200 --> 00:04:03,920 Speaker 1: to be a Phase two or a Phase three um 82 00:04:03,960 --> 00:04:06,040 Speaker 1: now I have to I have to tweak that now 83 00:04:06,120 --> 00:04:09,840 Speaker 1: because what Phase one has become is a multi phase 84 00:04:09,840 --> 00:04:12,760 Speaker 1: agreement on itself, so that now Phase one B is 85 00:04:12,760 --> 00:04:15,120 Speaker 1: going to be the equivalent of Phase two. And so 86 00:04:15,200 --> 00:04:16,880 Speaker 1: this is basically people are gonna be able to call 87 00:04:16,880 --> 00:04:20,640 Speaker 1: anything anyway they want. If whatever happens today in signing, 88 00:04:20,720 --> 00:04:22,839 Speaker 1: you know, the next few days will be part of 89 00:04:22,839 --> 00:04:26,000 Speaker 1: this first phase and the next part of it will 90 00:04:26,040 --> 00:04:28,400 Speaker 1: be an extension of Phase one. But will it be 91 00:04:28,480 --> 00:04:30,360 Speaker 1: Phase two or Phase one B? I mean, this is 92 00:04:30,360 --> 00:04:33,040 Speaker 1: going to start getting really confusing. I'm just imagining the 93 00:04:33,160 --> 00:04:37,480 Speaker 1: sort of uh, the Roman numeral outline that we're creating 94 00:04:37,520 --> 00:04:40,839 Speaker 1: for Phase one is going to be extensive. What is 95 00:04:40,880 --> 00:04:43,840 Speaker 1: the implication for the Chinese economy? In other words, will 96 00:04:43,880 --> 00:04:48,120 Speaker 1: this allow an acceleration or at least uh ceasing in 97 00:04:48,120 --> 00:04:52,000 Speaker 1: the deceleration that we've seen. Uh, it may not. It 98 00:04:52,040 --> 00:04:55,359 Speaker 1: won't stop the deceleration of the Chinese economy overall, because 99 00:04:55,400 --> 00:04:57,800 Speaker 1: that has a structural reason having to do with the 100 00:04:57,839 --> 00:05:00,159 Speaker 1: fact that the Chinese economy has too much debt. But 101 00:05:00,200 --> 00:05:02,280 Speaker 1: what the Chinese have been trying to do, they're trying 102 00:05:02,279 --> 00:05:03,640 Speaker 1: to do here. They've been trying to do since the 103 00:05:03,680 --> 00:05:05,760 Speaker 1: very beginning of the trade war is avert some of 104 00:05:05,839 --> 00:05:08,400 Speaker 1: the worst case scenarios. They want to make the situation 105 00:05:08,440 --> 00:05:11,360 Speaker 1: better for themselves. It's not tariffs that are that are 106 00:05:11,440 --> 00:05:15,040 Speaker 1: crushing growth in China, but these make it very difficult 107 00:05:15,040 --> 00:05:17,640 Speaker 1: to enact any type of reforms to allow businesses to 108 00:05:17,640 --> 00:05:20,919 Speaker 1: go bust because there's there's just additional pressure added on. 109 00:05:21,000 --> 00:05:23,320 Speaker 1: So the Chinese can lessen the amount of pressure from 110 00:05:23,400 --> 00:05:26,039 Speaker 1: tariffs and from Trump, then all of a sudden it 111 00:05:26,080 --> 00:05:28,200 Speaker 1: becomes a little bit easier to do the things that 112 00:05:28,240 --> 00:05:30,160 Speaker 1: they need to do to fix the economy. All right, 113 00:05:30,240 --> 00:05:32,400 Speaker 1: and so just can you give us a sense of 114 00:05:32,440 --> 00:05:34,040 Speaker 1: the lay of the land in China's We've heard a 115 00:05:34,080 --> 00:05:37,440 Speaker 1: lot about defaults and and picking up in China. How 116 00:05:37,480 --> 00:05:40,479 Speaker 1: are things going? Well. We're gonna have data coming out 117 00:05:40,520 --> 00:05:41,880 Speaker 1: in the in the coming days, and so I don't 118 00:05:41,880 --> 00:05:43,400 Speaker 1: want to jump the gun on this, but what I 119 00:05:43,440 --> 00:05:46,240 Speaker 1: will say is this, there is an enormous amount of 120 00:05:46,240 --> 00:05:48,000 Speaker 1: credit being pumped to the system in China, and we 121 00:05:48,040 --> 00:05:49,800 Speaker 1: saw that in Q two, Q three, we saw it 122 00:05:49,800 --> 00:05:52,360 Speaker 1: early in our Q four data. There is this idea 123 00:05:52,440 --> 00:05:55,120 Speaker 1: that that the Chinese economy is not getting sufficient stimulus. 124 00:05:55,160 --> 00:05:57,520 Speaker 1: It's nonsense. We're seeing some of the highest credit provision 125 00:05:57,560 --> 00:06:00,760 Speaker 1: levels that we've ever seen all the way back ten 126 00:06:00,839 --> 00:06:03,120 Speaker 1: years in China Beige Book. We're not seeing the heavy 127 00:06:03,160 --> 00:06:05,960 Speaker 1: infrastructure stimulus stuff yet we may never see it, hopefully 128 00:06:05,960 --> 00:06:08,800 Speaker 1: we don't. But we are seeing plenty of credit going 129 00:06:08,839 --> 00:06:12,080 Speaker 1: to firms from the banking sector, from the shadow banking sector. 130 00:06:12,520 --> 00:06:14,880 Speaker 1: Of bond sales at at at an all time high. 131 00:06:15,240 --> 00:06:18,320 Speaker 1: So there is plenty plenty of reason why they're keeping 132 00:06:18,320 --> 00:06:20,200 Speaker 1: this thing fluffed up. And I think if you also 133 00:06:20,279 --> 00:06:22,960 Speaker 1: get a relief from some of the tariff pressures, then 134 00:06:23,000 --> 00:06:25,000 Speaker 1: you may see a little bit of improvement in the 135 00:06:25,040 --> 00:06:27,800 Speaker 1: coming coming weeks and months. Leland Miller, thank you so 136 00:06:27,880 --> 00:06:31,080 Speaker 1: much for coming in today. Fantastic insightly Lin Miller chie 137 00:06:31,120 --> 00:06:33,400 Speaker 1: thinks I get the officer of China Beige Book International 138 00:06:33,920 --> 00:06:50,560 Speaker 1: joining us here in our interactive broker studio. Quite a 139 00:06:50,600 --> 00:06:54,679 Speaker 1: friday of news with We've got the China and US 140 00:06:54,880 --> 00:06:58,400 Speaker 1: trade deal UH coming to some sort of fruition. We're 141 00:06:58,440 --> 00:07:02,320 Speaker 1: getting some conflicting details. The most concrete aspect that we 142 00:07:02,440 --> 00:07:06,480 Speaker 1: do know is that the US will not impose the 143 00:07:07,200 --> 00:07:10,920 Speaker 1: December fifteen tariffs, both sides agreeing on that with Chinese 144 00:07:11,320 --> 00:07:14,000 Speaker 1: negotiators saying that, and then President Trump following up with 145 00:07:14,080 --> 00:07:17,640 Speaker 1: a tweet less clear about whether the US would roll 146 00:07:17,800 --> 00:07:20,840 Speaker 1: back any existing tariffs, with China saying that they would 147 00:07:21,360 --> 00:07:24,160 Speaker 1: and President Trump saying that they won't. How does a 148 00:07:24,320 --> 00:07:27,679 Speaker 1: treat or negotiate with all of this data and figure 149 00:07:27,720 --> 00:07:29,720 Speaker 1: out what to do in joining US now to speak 150 00:07:29,720 --> 00:07:32,720 Speaker 1: about just that? David Coudla, He's chief executive officer and 151 00:07:32,800 --> 00:07:38,080 Speaker 1: chief investment strategist Mainstain Capital Management. David, what don't you 152 00:07:38,080 --> 00:07:42,000 Speaker 1: make of today? Good morning, Lisa. Well, I think that 153 00:07:42,920 --> 00:07:45,720 Speaker 1: you know this is actually good news for investors and 154 00:07:45,840 --> 00:07:48,320 Speaker 1: good news for the markets. Uh, there's a lot of 155 00:07:48,360 --> 00:07:53,400 Speaker 1: confusion about what the Phase one deal really constitutes. But 156 00:07:53,480 --> 00:07:56,160 Speaker 1: the good news for the markets and good news for 157 00:07:56,200 --> 00:07:59,440 Speaker 1: investors is what we know at least is there's no 158 00:07:59,480 --> 00:08:04,760 Speaker 1: further escalation of the trade war. The tariffs that we're 159 00:08:04,800 --> 00:08:07,160 Speaker 1: going to go in on December fifteen won't go in. 160 00:08:07,520 --> 00:08:13,200 Speaker 1: There won't be any retaliatory traiffs from uh the Chinese. 161 00:08:13,520 --> 00:08:15,320 Speaker 1: And you know, the tariffs that were going in for 162 00:08:15,400 --> 00:08:20,320 Speaker 1: the US we're not only punitive on on the the 163 00:08:20,400 --> 00:08:23,320 Speaker 1: US tariffs for the Chinese were not only punitive on 164 00:08:23,560 --> 00:08:26,440 Speaker 1: Chinese goods, but they were going to impact a lot 165 00:08:26,440 --> 00:08:29,200 Speaker 1: of US companies as well, so it was very important 166 00:08:29,200 --> 00:08:34,600 Speaker 1: in that respect. The UH, the result is is is 167 00:08:34,640 --> 00:08:37,720 Speaker 1: we see no further escalation and and that's what the 168 00:08:37,720 --> 00:08:39,839 Speaker 1: markets want to hear, right, That's what the markets want 169 00:08:39,840 --> 00:08:42,000 Speaker 1: to hear. That's what we've been hearing all along. And 170 00:08:42,080 --> 00:08:44,880 Speaker 1: yet you're looking right now at an SMP basically flat, 171 00:08:45,400 --> 00:08:48,120 Speaker 1: the nastack up to tents of a percent, the Dow 172 00:08:48,480 --> 00:08:51,920 Speaker 1: basically unchanged. I mean, how come we're not seeing a 173 00:08:51,960 --> 00:08:55,520 Speaker 1: bigger pop. Well, there could be a little bit of 174 00:08:55,559 --> 00:08:57,600 Speaker 1: by the room or sell the news. Because we've been 175 00:08:57,600 --> 00:08:59,760 Speaker 1: hearing this over the past couple of days. I think 176 00:08:59,760 --> 00:09:03,160 Speaker 1: there's been some expectation that this is what we get, 177 00:09:03,200 --> 00:09:05,360 Speaker 1: that the tears. I think there's been an expectation by 178 00:09:05,360 --> 00:09:08,720 Speaker 1: the markets that the tariffs would not go into an effect. 179 00:09:08,720 --> 00:09:10,600 Speaker 1: So we've had a pretty good week for the market 180 00:09:10,679 --> 00:09:13,720 Speaker 1: the last couple of days. Um, so you know we've 181 00:09:13,760 --> 00:09:16,920 Speaker 1: we've got you know, green for the Dalla Nastac flat 182 00:09:16,960 --> 00:09:18,760 Speaker 1: on the s and P five hundred. But the last 183 00:09:18,760 --> 00:09:22,000 Speaker 1: couple of days, you know, we've had or at least 184 00:09:22,120 --> 00:09:26,040 Speaker 1: you know, yesterday, pretty good market and I think though 185 00:09:26,080 --> 00:09:29,320 Speaker 1: that if you take the combination of this UH and 186 00:09:29,679 --> 00:09:34,400 Speaker 1: UH certainty on Brexit, with Boris Johnson's big win and 187 00:09:34,840 --> 00:09:37,400 Speaker 1: what we were seeing with action out of the Fed 188 00:09:37,679 --> 00:09:40,800 Speaker 1: and what's coming there, we've got a constructive environment for 189 00:09:40,840 --> 00:09:42,400 Speaker 1: stocks here through the end of the year and headed 190 00:09:42,400 --> 00:09:46,080 Speaker 1: into Okay. That's actually something similar to what Carcadona, Chief 191 00:09:46,120 --> 00:09:48,679 Speaker 1: US Economists was saying earlier this morning. He was saying, 192 00:09:49,000 --> 00:09:51,760 Speaker 1: if you get some sort of truce where you don't 193 00:09:51,760 --> 00:09:54,840 Speaker 1: get the Desummer fifteen tariffs, we have that the UK 194 00:09:54,960 --> 00:09:58,679 Speaker 1: election over, we're probably going to get Brexit pretty easily 195 00:09:59,120 --> 00:10:02,640 Speaker 1: next month. That's going to to your turbo charge the 196 00:10:02,760 --> 00:10:06,000 Speaker 1: US economy. How much do you think that that will 197 00:10:06,040 --> 00:10:11,719 Speaker 1: translate into significant gains in US equities and other risk assets. Well, 198 00:10:11,720 --> 00:10:15,040 Speaker 1: it's interesting when when we look at all the factors 199 00:10:15,080 --> 00:10:19,320 Speaker 1: and we've had three quarters of negative earnings growth or 200 00:10:19,360 --> 00:10:24,200 Speaker 1: basically earnings contraction and probably going to have you know, 201 00:10:24,320 --> 00:10:27,280 Speaker 1: struggle in the fourth quarter again with earnings. We look 202 00:10:27,320 --> 00:10:31,600 Speaker 1: for earnings to improve in UH, but earnings just haven't 203 00:10:31,640 --> 00:10:36,440 Speaker 1: mattered really this year, as is evident by the advance 204 00:10:36,480 --> 00:10:39,640 Speaker 1: we've seen in the major indexes, and even with uh, 205 00:10:39,720 --> 00:10:43,199 Speaker 1: you know, all the anxiety over the trade war and 206 00:10:43,320 --> 00:10:46,960 Speaker 1: the uncertainty over Brexit, these other factors. What it's really 207 00:10:47,000 --> 00:10:50,520 Speaker 1: come back to, UH, I believe, we believe is the 208 00:10:50,600 --> 00:10:55,880 Speaker 1: FED and the amount of liquidity that they are injecting 209 00:10:55,840 --> 00:10:58,240 Speaker 1: into the system. We had at this time last year 210 00:10:58,679 --> 00:11:01,640 Speaker 1: a very hostile Fed UH in terms of their tone 211 00:11:01,679 --> 00:11:04,120 Speaker 1: towards the market, and that was a big part of 212 00:11:04,120 --> 00:11:06,320 Speaker 1: what we think, you know, big part of the sell 213 00:11:06,360 --> 00:11:09,559 Speaker 1: off we saw last year nineteen six percent by by 214 00:11:09,679 --> 00:11:13,200 Speaker 1: Christmas eve of last year, the fourth quarter from September 215 00:11:13,240 --> 00:11:17,760 Speaker 1: twenty through December. The FED changed their tone and the 216 00:11:17,800 --> 00:11:22,040 Speaker 1: markets did a lot better starting on December and did 217 00:11:22,040 --> 00:11:26,480 Speaker 1: well all year. Quantitative easy, Quantitative tightening has turned to 218 00:11:26,600 --> 00:11:31,320 Speaker 1: quantitative easing. We've gotten that somewhat forced on the FED 219 00:11:31,559 --> 00:11:36,800 Speaker 1: through these repo operations. But that money going into the system, 220 00:11:36,840 --> 00:11:41,959 Speaker 1: that injection of liquidity is more money all the same 221 00:11:42,320 --> 00:11:45,760 Speaker 1: that's going into It's making its way into into equities, 222 00:11:45,840 --> 00:11:48,880 Speaker 1: making its way into the financial markets. And you know, 223 00:11:48,920 --> 00:11:50,960 Speaker 1: we go back to that old adage, don't fight the FED. 224 00:11:51,080 --> 00:11:53,160 Speaker 1: And I think that's one of the most important catalysts 225 00:11:53,160 --> 00:11:56,440 Speaker 1: for the markets going forward. And that money is coming 226 00:11:56,440 --> 00:11:59,319 Speaker 1: to the system, and it's pushing asset prices higher. David, 227 00:11:59,320 --> 00:12:01,840 Speaker 1: that's a really elien point, especially as we see yields 228 00:12:01,840 --> 00:12:05,160 Speaker 1: go lower today on this deal, and this comes after 229 00:12:05,679 --> 00:12:08,240 Speaker 1: they rose quite a bit yesterday, yields up priced down 230 00:12:08,679 --> 00:12:11,640 Speaker 1: with the prospect of some sort of trade deal looming 231 00:12:11,679 --> 00:12:15,000 Speaker 1: ever imminent. And the idea is that you know, how 232 00:12:15,080 --> 00:12:18,720 Speaker 1: high can treasury yields go given how much liquidity the 233 00:12:18,720 --> 00:12:21,040 Speaker 1: FED is pumping into this system, and that that kind 234 00:12:21,040 --> 00:12:23,960 Speaker 1: of reality where you have stable rates and you have 235 00:12:24,040 --> 00:12:27,840 Speaker 1: a constructive business environment, is going to be perfect for 236 00:12:27,960 --> 00:12:30,400 Speaker 1: US equities. And that's what people have been saying. What 237 00:12:30,520 --> 00:12:33,120 Speaker 1: kind of returns are you expecting next year? Uh? For 238 00:12:33,240 --> 00:12:38,320 Speaker 1: the SMP. Well, we've obviously had a better year this 239 00:12:38,440 --> 00:12:41,840 Speaker 1: year than than many would have expected, and and I 240 00:12:41,880 --> 00:12:45,920 Speaker 1: think that next year we could be surprised again. Uh. 241 00:12:45,960 --> 00:12:48,360 Speaker 1: You know, I could give the normal forecast that everyone 242 00:12:48,440 --> 00:12:51,720 Speaker 1: gives will get somewhere between six and nine percent returns 243 00:12:51,720 --> 00:12:54,080 Speaker 1: that you hear a lot of people forecast every year. 244 00:12:54,520 --> 00:12:56,840 Speaker 1: But I think I think next year we've got an 245 00:12:56,840 --> 00:13:00,320 Speaker 1: election year. I'll say the same thing I said last 246 00:13:00,360 --> 00:13:04,240 Speaker 1: year that the economy better than many expected. We had 247 00:13:04,280 --> 00:13:07,840 Speaker 1: so many predicting a recession, so many predicting bear market 248 00:13:08,000 --> 00:13:10,480 Speaker 1: last year at this time, and you know, I just 249 00:13:10,520 --> 00:13:13,400 Speaker 1: wouldn't be surprised if we see double digit returns for 250 00:13:13,440 --> 00:13:17,480 Speaker 1: the major indexes next year. Interesting and just real quick 251 00:13:17,559 --> 00:13:20,800 Speaker 1: also because we do have you from Michigan, I'm wondering 252 00:13:20,920 --> 00:13:24,400 Speaker 1: what the trade deal could mean for the auto industry 253 00:13:24,440 --> 00:13:27,200 Speaker 1: given how beaten up. Are not beaten up, but but 254 00:13:27,320 --> 00:13:30,520 Speaker 1: certainly with auto sales in decline for as long as 255 00:13:30,559 --> 00:13:33,480 Speaker 1: they have are decelerating to the degree they have. Well, 256 00:13:33,920 --> 00:13:37,600 Speaker 1: it's very important because uh, you know, and we've talked 257 00:13:37,600 --> 00:13:41,240 Speaker 1: about this, it's it's just uh, the auto industry and 258 00:13:41,400 --> 00:13:46,400 Speaker 1: when we talk about, uh, these tariffs on imports, it's 259 00:13:46,440 --> 00:13:50,319 Speaker 1: not the same environment of four or fifty years ago. Uh. 260 00:13:50,360 --> 00:13:55,520 Speaker 1: There is so many uh parts and subsystems and vehicles 261 00:13:56,000 --> 00:14:01,560 Speaker 1: that are shipped abroad and cross international lines. When you 262 00:14:01,600 --> 00:14:06,640 Speaker 1: look at between Michigan and Canada and between the US 263 00:14:06,679 --> 00:14:09,880 Speaker 1: and Mexico, it's it's literally as if the assembly lines 264 00:14:09,960 --> 00:14:14,120 Speaker 1: criss cross those international lines. Though it's very important that 265 00:14:14,800 --> 00:14:19,680 Speaker 1: uh there's certainty certainly for supply chains and for where 266 00:14:19,760 --> 00:14:23,160 Speaker 1: vehicles are being produced and ship to that that the 267 00:14:23,200 --> 00:14:27,560 Speaker 1: auto companies have certainty as they're determining where they put plants, 268 00:14:28,040 --> 00:14:33,560 Speaker 1: where they developed their supply chains. And because UH many 269 00:14:33,560 --> 00:14:37,320 Speaker 1: of the automakers US and otherwise are global automakers. Now 270 00:14:38,240 --> 00:14:41,080 Speaker 1: you know, what's going on here is very disruptive to 271 00:14:41,160 --> 00:14:46,000 Speaker 1: the US automakers GM Ford, UH Chrysler and automakers around 272 00:14:46,000 --> 00:14:48,400 Speaker 1: the world. So, you know, as much as anything, they 273 00:14:48,480 --> 00:14:50,600 Speaker 1: want to see some certainty around in this. So the 274 00:14:50,600 --> 00:14:53,920 Speaker 1: more this gets worked out, the better. David could Loud, 275 00:14:54,000 --> 00:14:58,440 Speaker 1: chief executive officer and chief investment strategist at Mainstay Capital Management. 276 00:15:13,280 --> 00:15:16,600 Speaker 1: Just to reiterate the headlines about China that the US 277 00:15:16,720 --> 00:15:21,359 Speaker 1: has agreed not to implement the threatened December fifteen tariffs. 278 00:15:21,800 --> 00:15:25,320 Speaker 1: We also have some discussion of a trade deal that 279 00:15:25,440 --> 00:15:28,840 Speaker 1: has been signed off on at least by President Trump 280 00:15:28,880 --> 00:15:33,000 Speaker 1: and Chinese negotiators. Exactly what that looks like, though, does 281 00:15:33,240 --> 00:15:36,040 Speaker 1: remain to be seen. We are seeing corn and soy 282 00:15:36,120 --> 00:15:38,920 Speaker 1: prices in particular rise on the heels of this. Michael 283 00:15:38,960 --> 00:15:42,200 Speaker 1: Hurts are joining us now, an agricultural reporter for Bloomberg 284 00:15:42,280 --> 00:15:44,240 Speaker 1: joining us for Chicago. Michael, can you first just give 285 00:15:44,320 --> 00:15:48,080 Speaker 1: us a sense of what the impact of the trade 286 00:15:48,360 --> 00:15:50,400 Speaker 1: skirmish between the U S and China has had on 287 00:15:50,440 --> 00:15:53,760 Speaker 1: the agricultural sector over the past two years. Sure, so, 288 00:15:53,800 --> 00:15:56,480 Speaker 1: I mean exports to China. You know that one of 289 00:15:56,520 --> 00:15:59,640 Speaker 1: the top markets in the world have plunged from the US. 290 00:16:00,360 --> 00:16:03,000 Speaker 1: They've started to recover a bit as the two sides 291 00:16:03,080 --> 00:16:06,240 Speaker 1: have you know, had various bouts at the negotiating table, 292 00:16:06,320 --> 00:16:10,160 Speaker 1: but still remain below levels you know seen as recently 293 00:16:10,200 --> 00:16:16,080 Speaker 1: as and farmers are are struggling with prices. UM prices 294 00:16:16,080 --> 00:16:19,280 Speaker 1: have gotten a little better, but there's still more supply 295 00:16:19,720 --> 00:16:22,400 Speaker 1: than there is demand and they really want China to 296 00:16:22,480 --> 00:16:25,600 Speaker 1: come back. What do we know so far about the 297 00:16:25,680 --> 00:16:29,000 Speaker 1: agricultural component of the trade deal that appears to be 298 00:16:29,040 --> 00:16:32,440 Speaker 1: struck between the U S and China. At the press 299 00:16:32,480 --> 00:16:35,320 Speaker 1: conference that they just held, you know, eleven PM in Beijing, 300 00:16:35,480 --> 00:16:40,040 Speaker 1: UM they said they would notably increase UM imports, but 301 00:16:40,240 --> 00:16:42,760 Speaker 1: and that's kind of all we have. They did say 302 00:16:42,800 --> 00:16:46,160 Speaker 1: they want to keep things UM on w t O 303 00:16:46,440 --> 00:16:51,320 Speaker 1: rules and make purchases as the market dictates, which traders 304 00:16:51,360 --> 00:16:54,040 Speaker 1: kind of took that as as China kind of continuing 305 00:16:54,400 --> 00:16:57,640 Speaker 1: to buy UM as best suits them, which could be 306 00:16:57,720 --> 00:16:59,920 Speaker 1: from the US, it could be from Brazil on the 307 00:17:00,000 --> 00:17:03,440 Speaker 1: as far as sowbeans go. So the details remain elusive, 308 00:17:03,600 --> 00:17:08,840 Speaker 1: and China did not confirm sort of reports of commitments 309 00:17:08,840 --> 00:17:12,600 Speaker 1: of as many as fifty billion dollars of imports in 310 00:17:13,920 --> 00:17:17,840 Speaker 1: and people are really hoping for that alright, So, um, 311 00:17:17,880 --> 00:17:20,960 Speaker 1: what are some of the questions now that remain? Basically, 312 00:17:21,200 --> 00:17:24,679 Speaker 1: you know, can can they can the import fifty billion 313 00:17:24,680 --> 00:17:27,639 Speaker 1: dollars worth of US add goods? Is that even possible? 314 00:17:28,400 --> 00:17:32,440 Speaker 1: Back in seventeen they imported about twenty billion, so this 315 00:17:32,480 --> 00:17:35,359 Speaker 1: would be kind of double more than double pre trade 316 00:17:35,400 --> 00:17:38,359 Speaker 1: war levels. And you could look at Hong Kong and 317 00:17:38,440 --> 00:17:41,600 Speaker 1: that's maybe another four billion or so. And even if 318 00:17:41,640 --> 00:17:45,960 Speaker 1: you add those together, um, getting to that fifty billion 319 00:17:46,000 --> 00:17:49,720 Speaker 1: dollar number, even if China has committed to that is 320 00:17:49,760 --> 00:17:52,280 Speaker 1: still just kind of a major question mark. One thing 321 00:17:52,280 --> 00:17:54,880 Speaker 1: that I was struck by in the Beijing press conference 322 00:17:54,920 --> 00:17:57,880 Speaker 1: by Chinese trade negotiators. They were saying that they're trying 323 00:17:57,920 --> 00:18:03,040 Speaker 1: to develop their own internal agricultural and UH and poultry 324 00:18:03,040 --> 00:18:06,320 Speaker 1: for example, exports and they were talking about exporting poultry. 325 00:18:07,200 --> 00:18:09,160 Speaker 1: Is that going to be part of this that basically 326 00:18:09,200 --> 00:18:12,840 Speaker 1: they want to develop their their products as well on 327 00:18:12,880 --> 00:18:15,639 Speaker 1: this side, and are trying to promote that or is 328 00:18:15,680 --> 00:18:19,040 Speaker 1: this just a messaging issue? You know that is that is? Um? 329 00:18:19,040 --> 00:18:21,240 Speaker 1: This sort of a tip for tad on the poultry. 330 00:18:21,480 --> 00:18:25,520 Speaker 1: Um they allowed for some I believe it's prepared Chinese 331 00:18:25,600 --> 00:18:29,119 Speaker 1: poultry products to come into the US in exchange for 332 00:18:29,640 --> 00:18:34,119 Speaker 1: reopening the Chinese market to US poultry. UM. So I 333 00:18:34,119 --> 00:18:37,359 Speaker 1: think people think there might be some prepared products that 334 00:18:37,400 --> 00:18:41,000 Speaker 1: would come back into the US. How how good do 335 00:18:41,040 --> 00:18:45,320 Speaker 1: you think this deal will be for for farmers across America? 336 00:18:45,359 --> 00:18:47,280 Speaker 1: I mean, do you think that this sort of certainty 337 00:18:47,320 --> 00:18:50,160 Speaker 1: in China coming back into the market will save off 338 00:18:50,200 --> 00:18:52,159 Speaker 1: some of the increase in bankruptcies that we've seen in 339 00:18:52,200 --> 00:18:55,080 Speaker 1: the Upper Midwest? You know, I think that you know, 340 00:18:55,080 --> 00:18:57,760 Speaker 1: it's still really remains to be seen. The fact that 341 00:18:57,880 --> 00:19:00,879 Speaker 1: China was you know uplade on aliety having a press 342 00:19:00,880 --> 00:19:03,920 Speaker 1: conference and publicly saying that you know, a phase one 343 00:19:03,920 --> 00:19:06,919 Speaker 1: has been reached. Is is great news for farmers. But 344 00:19:07,440 --> 00:19:09,639 Speaker 1: now kind of getting down to the brass tacks of 345 00:19:09,640 --> 00:19:12,280 Speaker 1: how this is all going to play out, UM, it 346 00:19:12,520 --> 00:19:15,560 Speaker 1: should be good? How good is kind of the question? 347 00:19:15,840 --> 00:19:17,680 Speaker 1: Can you give us a sense of where we are 348 00:19:17,760 --> 00:19:21,600 Speaker 1: in the shakeout? Because there have been uh, bankruptcies that 349 00:19:21,640 --> 00:19:24,480 Speaker 1: have been with an increasing pace in the Upper Midwest. 350 00:19:24,680 --> 00:19:26,800 Speaker 1: And this doesn't just have to do with trade skirmishes. 351 00:19:26,880 --> 00:19:29,159 Speaker 1: This has to do with the price of grain and 352 00:19:29,200 --> 00:19:31,440 Speaker 1: a whole host of other issues as well. Where are 353 00:19:31,480 --> 00:19:34,639 Speaker 1: we in that shakeout? Yeah, so, you know, the US 354 00:19:34,800 --> 00:19:37,480 Speaker 1: government has has doled out you know, I think twenty 355 00:19:37,560 --> 00:19:40,640 Speaker 1: four billion dollars in aid payments as these trade disputes 356 00:19:40,680 --> 00:19:45,000 Speaker 1: have gone on, which has helped um with farmer finances. 357 00:19:45,040 --> 00:19:47,919 Speaker 1: But this could be sort of a reckoning um in 358 00:19:47,920 --> 00:19:51,280 Speaker 1: the next six months to a year as as this 359 00:19:51,359 --> 00:19:54,960 Speaker 1: stuff really starts to play out and farmers need things 360 00:19:55,000 --> 00:19:58,000 Speaker 1: to get better to kind of smooth out a few 361 00:19:58,480 --> 00:20:01,199 Speaker 1: down years on finance. Is um. It's getting to be. 362 00:20:01,440 --> 00:20:05,159 Speaker 1: Credit conditions are are maybe improving slightly for farmers, but 363 00:20:05,200 --> 00:20:08,960 Speaker 1: they're very stressed and they need some help. Michael hurts Or, 364 00:20:09,000 --> 00:20:10,920 Speaker 1: thank you so much for being with us. Michael hurts Or, 365 00:20:11,119 --> 00:20:30,040 Speaker 1: agricultural reporter for Bloomberg News, joining us from Chicago. We've 366 00:20:30,040 --> 00:20:32,240 Speaker 1: been talking a lot about trade and the idea that 367 00:20:32,280 --> 00:20:34,879 Speaker 1: the US and China have come to some sort of agreement, 368 00:20:34,960 --> 00:20:38,919 Speaker 1: but we can't let that overshadow the incredible victory of 369 00:20:38,960 --> 00:20:42,600 Speaker 1: Boris Johnson in the United Kingdom overnight. If you take 370 00:20:42,640 --> 00:20:45,720 Speaker 1: a look, with all seats declared, the Conservatives had won 371 00:20:45,880 --> 00:20:48,879 Speaker 1: three hundred and sixty five of the six hundred and 372 00:20:48,880 --> 00:20:50,920 Speaker 1: fifty seats in the House of Commons. That is a 373 00:20:51,000 --> 00:20:53,480 Speaker 1: gain of forty eight to Labors two oh three seats, 374 00:20:53,480 --> 00:20:57,359 Speaker 1: which is down fifty nine, a massive win, possibly the 375 00:20:57,400 --> 00:20:59,879 Speaker 1: most since the nineteen thirties. Joining us now Professor j 376 00:21:00,000 --> 00:21:03,199 Speaker 1: Ney Blanche flower Well. He's professor of economics at Dartmouth College. 377 00:21:03,359 --> 00:21:06,720 Speaker 1: He's in Geneva. What are you doing in Geneva, Danny Well? 378 00:21:06,880 --> 00:21:09,960 Speaker 1: Interesting days. I'm actually in Geneva. I gave a keynote 379 00:21:09,960 --> 00:21:13,840 Speaker 1: to the big conference here on full employment, sort of 380 00:21:13,880 --> 00:21:16,480 Speaker 1: relevant to what's going on around the world and relevant 381 00:21:16,520 --> 00:21:19,960 Speaker 1: to what's happened in the UK where basically lots of 382 00:21:20,000 --> 00:21:22,320 Speaker 1: people are hurting. And I'm just looking at the list 383 00:21:22,400 --> 00:21:26,120 Speaker 1: of seats that the Labor Party lost in the traditional 384 00:21:26,800 --> 00:21:35,040 Speaker 1: Labor heartland Burnley, Derby, Glasgow, all around the country, Newcastle 385 00:21:35,160 --> 00:21:40,200 Speaker 1: underlying Peterborough, Skundel. I mean, this is a devastating defeat 386 00:21:40,359 --> 00:21:43,840 Speaker 1: and I think really driven by on the doorstep that 387 00:21:44,000 --> 00:21:46,280 Speaker 1: the election in the end didn't come down to Brexit. 388 00:21:46,640 --> 00:21:48,919 Speaker 1: It came down to the leader of the Labor Party 389 00:21:49,200 --> 00:21:54,160 Speaker 1: who people saw unelectable um and have nothing to offer them. 390 00:21:54,320 --> 00:21:56,240 Speaker 1: So I think it's very interesting. And the other point 391 00:21:56,359 --> 00:21:59,120 Speaker 1: is that the polls, the opinion pollship have been bad 392 00:21:59,119 --> 00:22:03,320 Speaker 1: in the past, got it absolutely spot on, okay. So 393 00:22:03,680 --> 00:22:08,280 Speaker 1: I guess that is the takeaway here, that that that 394 00:22:08,280 --> 00:22:12,359 Speaker 1: that UK citizens are just sick of Brexit discussions, just 395 00:22:12,400 --> 00:22:15,880 Speaker 1: want it done. Or is the takeaway really that Brexit 396 00:22:15,960 --> 00:22:18,520 Speaker 1: was sort of the back drop issue and then it 397 00:22:18,600 --> 00:22:20,600 Speaker 1: was a lot of other things that took the four 398 00:22:21,440 --> 00:22:24,840 Speaker 1: that really drove Boris Johnson to victory. Well, I think 399 00:22:24,880 --> 00:22:26,480 Speaker 1: it was that, I mean the message in a way 400 00:22:26,520 --> 00:22:28,960 Speaker 1: it was I mean, if you think of the Trump message, 401 00:22:29,040 --> 00:22:33,600 Speaker 1: make America great again, and Boris's message was get Brexit 402 00:22:33,800 --> 00:22:37,480 Speaker 1: dumb and nobody had to faint his clue what Jeremy 403 00:22:37,520 --> 00:22:40,280 Speaker 1: Corbyn's view on Brexit was the biggest issue with fifty 404 00:22:40,359 --> 00:22:43,000 Speaker 1: years in Britain. He said, well, I'll wait and I'll 405 00:22:43,040 --> 00:22:45,520 Speaker 1: think about it later, because everyone knew that he was 406 00:22:45,600 --> 00:22:47,680 Speaker 1: against it. I'm One of the big things that also 407 00:22:47,720 --> 00:22:51,119 Speaker 1: happened was that he had the issues of anti Semitism 408 00:22:51,119 --> 00:22:53,480 Speaker 1: in the Labor Party in the In the week before 409 00:22:53,520 --> 00:22:55,720 Speaker 1: the election, he was asked on the one interview four 410 00:22:55,800 --> 00:22:59,120 Speaker 1: times would he condemn anti semitism and he wouldn't. I mean, 411 00:22:59,480 --> 00:23:02,680 Speaker 1: howing was this only name you wouldn't condemned anti semitism, 412 00:23:02,920 --> 00:23:05,240 Speaker 1: but you didn't, and that had a huge electoral effect. 413 00:23:05,440 --> 00:23:08,720 Speaker 1: So I think it was that Boris had a simple message, 414 00:23:09,440 --> 00:23:12,919 Speaker 1: wanted to get things done, and the opposition just looked 415 00:23:12,920 --> 00:23:15,280 Speaker 1: clueless and the and the interesting thing in a way 416 00:23:15,400 --> 00:23:18,280 Speaker 1: was that the economic package that label was given was 417 00:23:18,320 --> 00:23:23,240 Speaker 1: probably the most sensible spending on the NHS, infrastructure spending 418 00:23:23,480 --> 00:23:27,159 Speaker 1: and actually some re nationalizations that were hugely popular. But 419 00:23:27,280 --> 00:23:29,320 Speaker 1: that wasn't the message that came through. And on the 420 00:23:29,320 --> 00:23:31,240 Speaker 1: doorstep it turned out the breaks it was kind of 421 00:23:31,600 --> 00:23:34,679 Speaker 1: third It was about that this is not a credible opposition. 422 00:23:34,960 --> 00:23:38,040 Speaker 1: I'm scared to death of having somebody like Jeremy Corbyn 423 00:23:38,160 --> 00:23:40,399 Speaker 1: in there. And the other one is that the leader 424 00:23:40,440 --> 00:23:44,040 Speaker 1: of the Third Party lost her seat and socially so 425 00:23:44,119 --> 00:23:46,520 Speaker 1: she resigned from the Third Party. So this is this 426 00:23:46,600 --> 00:23:49,400 Speaker 1: is the worst thing, the worst defeat for Labor since 427 00:23:49,520 --> 00:23:52,960 Speaker 1: n How Jeremy Corbyn has not designed I don't know. 428 00:23:53,000 --> 00:23:55,760 Speaker 1: I mean I was on his advisory channel in two 429 00:23:55,800 --> 00:23:58,399 Speaker 1: thousand and sixteen along with Picoty and just Stiglets, the 430 00:23:58,440 --> 00:24:00,959 Speaker 1: Nobel Prize winner, and we all bailed out when we 431 00:24:01,000 --> 00:24:04,240 Speaker 1: realize very quickly that this was a disaster in the making. 432 00:24:05,200 --> 00:24:07,399 Speaker 1: We had nothing to offer, And so it's a combination 433 00:24:07,440 --> 00:24:09,720 Speaker 1: of things. And I think the take the take home 434 00:24:09,960 --> 00:24:12,680 Speaker 1: in a sense of the United States is that populous 435 00:24:12,760 --> 00:24:15,960 Speaker 1: leaders with simple messages which appeal to people who are 436 00:24:16,040 --> 00:24:19,120 Speaker 1: hurting and don't really explain in full detail what they're 437 00:24:19,119 --> 00:24:22,119 Speaker 1: going to do is electorally populous. What we saw in 438 00:24:22,200 --> 00:24:25,080 Speaker 1: two thousand and sixteen, it may well be what we'll 439 00:24:25,119 --> 00:24:27,359 Speaker 1: see in two thousand twenty. And Trump is going to 440 00:24:27,400 --> 00:24:29,919 Speaker 1: take this as an indicator that maybe you know, if 441 00:24:29,960 --> 00:24:31,840 Speaker 1: he goes along with this kind of message, he's going 442 00:24:31,840 --> 00:24:35,199 Speaker 1: to go get reelected. So, given your political experience, and 443 00:24:35,280 --> 00:24:39,080 Speaker 1: given your experience on the Bank of England Monetary Policy 444 00:24:39,119 --> 00:24:41,679 Speaker 1: Committee as a member, can you give us a sense 445 00:24:41,880 --> 00:24:44,760 Speaker 1: of what the victory means for the economy which you 446 00:24:44,800 --> 00:24:48,960 Speaker 1: expect going forward for the United Kingdom? Yeah, I mean, 447 00:24:49,000 --> 00:24:50,960 Speaker 1: I mean, I think the first thing is at least 448 00:24:50,960 --> 00:24:56,120 Speaker 1: it settles the uncertainty markets know what's coming. We've seen 449 00:24:56,160 --> 00:25:00,760 Speaker 1: a surge in the stock market, we've seen home builders 450 00:25:00,840 --> 00:25:05,399 Speaker 1: utilities pushing forward, we've seen a gain in town. But 451 00:25:05,480 --> 00:25:08,840 Speaker 1: my suspicion is that the NPC, it is voted at 452 00:25:08,840 --> 00:25:12,440 Speaker 1: this meeting next week, may seriously consider doing a rap 453 00:25:12,480 --> 00:25:15,320 Speaker 1: cup because the uncertainty has sort of being resolved, but 454 00:25:15,359 --> 00:25:17,640 Speaker 1: the economy is sitting in the doldruns and the last 455 00:25:17,680 --> 00:25:21,400 Speaker 1: meeting there were two dissenters looking for for a cup. 456 00:25:22,040 --> 00:25:24,280 Speaker 1: I mean, so the reality is that the Bank of 457 00:25:24,320 --> 00:25:27,160 Speaker 1: England is the only show in how right now? I mean, well, 458 00:25:27,280 --> 00:25:29,560 Speaker 1: we'll get a new chance of the Exchequer and maybe 459 00:25:29,560 --> 00:25:31,000 Speaker 1: in the next two or three weeks you and I 460 00:25:31,000 --> 00:25:33,560 Speaker 1: will be talking about the appointment of a new governor 461 00:25:33,560 --> 00:25:36,119 Speaker 1: that Boris is going to make. My suspicion is he 462 00:25:36,200 --> 00:25:39,520 Speaker 1: might appoint my old my old college roommate, Jerry Lyons, 463 00:25:39,520 --> 00:25:43,040 Speaker 1: who was his chief economist in London. He and I 464 00:25:43,080 --> 00:25:46,359 Speaker 1: were pluditutes to get what he may well do. But 465 00:25:46,400 --> 00:25:49,040 Speaker 1: we're wait, wait, wa wa wa. We you were roommates. 466 00:25:49,160 --> 00:25:51,920 Speaker 1: You're not getting away with that, with saying that your roommates. 467 00:25:51,960 --> 00:25:54,760 Speaker 1: What was he like as a roommate? Well, I mean, 468 00:25:54,800 --> 00:25:56,440 Speaker 1: I mean when I say a roommate. He was actually 469 00:25:56,520 --> 00:25:58,520 Speaker 1: my office mate. You know, we didn't share deegs, but 470 00:25:58,600 --> 00:26:02,560 Speaker 1: we worked together. He's so let's get this clear, right 471 00:26:02,800 --> 00:26:06,200 Speaker 1: many answer is a very well trained economist called PhD 472 00:26:06,400 --> 00:26:09,760 Speaker 1: in economics and macro, got very well experienced in the 473 00:26:09,800 --> 00:26:12,359 Speaker 1: City of London and a lot of money. Worked as 474 00:26:12,400 --> 00:26:15,320 Speaker 1: an economist for for Boris Johnson when he was the mayor. 475 00:26:15,760 --> 00:26:17,879 Speaker 1: And it's been strongly pro Brexit. I mean, he and 476 00:26:17,920 --> 00:26:20,040 Speaker 1: I have disagreed on that, but you would certainly call 477 00:26:20,160 --> 00:26:24,920 Speaker 1: him a credible trained economist. Um. He's been very kind 478 00:26:24,920 --> 00:26:29,960 Speaker 1: of pro green, pretty pretty strong on boosting the economy 479 00:26:30,160 --> 00:26:32,880 Speaker 1: and might well result in you know, some some move 480 00:26:33,000 --> 00:26:35,920 Speaker 1: to the center. But my suspicion is now Boris can 481 00:26:35,920 --> 00:26:39,199 Speaker 1: do whatever Boris likes, and I think Jerry lies now 482 00:26:39,240 --> 00:26:41,479 Speaker 1: goes to the top of the heap. Um. I mean 483 00:26:41,480 --> 00:26:45,280 Speaker 1: he's a smart, good guy. I disagree with. But you know, 484 00:26:45,520 --> 00:26:47,080 Speaker 1: would you say to me it would he be a 485 00:26:47,080 --> 00:26:50,480 Speaker 1: good appointment? I would say, yeah, I could work with 486 00:26:50,520 --> 00:26:53,119 Speaker 1: the guy. All right, Just one minute here, I'm just 487 00:26:53,200 --> 00:26:57,199 Speaker 1: wondering going forward. You know, people are saying that business 488 00:26:57,280 --> 00:26:59,840 Speaker 1: confidence is going to be unleashed and people will spend again, 489 00:27:00,200 --> 00:27:02,600 Speaker 1: is that accurate given the uncertainties that remain with an 490 00:27:02,600 --> 00:27:06,440 Speaker 1: actual trade deal with the UK and the EU. Well, 491 00:27:06,440 --> 00:27:08,560 Speaker 1: it's a really great question. I mean, obviously that the 492 00:27:08,840 --> 00:27:12,120 Speaker 1: thing we've talked about is get breakfast done and you say, okay, 493 00:27:12,160 --> 00:27:15,640 Speaker 1: we're going to do this in January. But Macron immediately 494 00:27:15,920 --> 00:27:18,120 Speaker 1: came out today and said, well, okay, now the real 495 00:27:18,160 --> 00:27:20,520 Speaker 1: business start. What are you going to do. Are you 496 00:27:20,560 --> 00:27:22,560 Speaker 1: going to negotiate a deal with US that you're going 497 00:27:22,640 --> 00:27:25,959 Speaker 1: to instead of just coming out with you know, with dreams, 498 00:27:26,040 --> 00:27:30,879 Speaker 1: with dreamland stuff. Are you going to seriously negotiate with 499 00:27:30,960 --> 00:27:35,199 Speaker 1: US um and and compromise. So I think that's what happens. 500 00:27:35,240 --> 00:27:37,360 Speaker 1: And then of course what happens is you go into 501 00:27:37,440 --> 00:27:40,040 Speaker 1: a long transition period. You need to resolve the issues 502 00:27:40,080 --> 00:27:42,800 Speaker 1: in Ireland. He's certainly going to be faced with the 503 00:27:42,880 --> 00:27:46,560 Speaker 1: prospect of losing Scotland. I mean that this mp UM 504 00:27:46,880 --> 00:27:49,040 Speaker 1: basically swept the board in Scotland. They're going to ask 505 00:27:49,040 --> 00:27:51,560 Speaker 1: for a second referenda. They're actually going to say we 506 00:27:51,640 --> 00:27:54,080 Speaker 1: want to leave the Europe, leave the UK and go 507 00:27:54,160 --> 00:27:55,760 Speaker 1: back to the EU. So there are going to be 508 00:27:55,920 --> 00:27:58,800 Speaker 1: all these kinds of issues. In a sense, you win 509 00:27:58,920 --> 00:28:01,120 Speaker 1: this thing, and you say every things easy, and now 510 00:28:01,119 --> 00:28:03,879 Speaker 1: the hogs stops. So I think you know Macron has 511 00:28:03,920 --> 00:28:06,639 Speaker 1: immediately gone in the system. What's your negotiating position. You 512 00:28:06,680 --> 00:28:08,960 Speaker 1: can't make up this stuff. You've actually got to sit 513 00:28:09,040 --> 00:28:12,359 Speaker 1: at the table with us, and you can't pick cherry 514 00:28:12,440 --> 00:28:14,320 Speaker 1: pick a little bit that you like if you want 515 00:28:14,320 --> 00:28:17,680 Speaker 1: to do that. It's a no deal breakfast. Yes, Unfortunately 516 00:28:17,720 --> 00:28:18,960 Speaker 1: we have to leave it there. I could speak with 517 00:28:19,000 --> 00:28:21,679 Speaker 1: you all day. Danny blanche Flower, professor of economics at 518 00:28:21,760 --> 00:28:24,639 Speaker 1: Dartmouth College. Thank you, thank you, thank you for joining 519 00:28:24,680 --> 00:28:29,000 Speaker 1: us and giving us that fantastic perspective from Geneva. Thanks 520 00:28:29,000 --> 00:28:31,320 Speaker 1: for listening to the Bloomberg p L podcast. You can 521 00:28:31,359 --> 00:28:34,200 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 522 00:28:34,240 --> 00:28:37,240 Speaker 1: podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter 523 00:28:37,320 --> 00:28:39,920 Speaker 1: at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter 524 00:28:40,000 --> 00:28:42,520 Speaker 1: at Lisa A. Bram Woods One. Before the podcast, you 525 00:28:42,520 --> 00:28:45,040 Speaker 1: can always catch us worldwide on Bloomberg Radio.